Despite the insider-trading scandal that has cost it billions, FrontPoint Partners' spin-off from Morgan Stanley will move forward.

The split will now occur in March, co-CEO Daniel Waters told employees in a memo issued Thursday, the New York Post reports. The insider-trading scandal—which led FrontPoint to dismiss its entire healthcare team and liquidate its healthcare hedge funds—did force the hedge fund to renegotiate and revise the terms of the spin-off, Waters said.

Morgan Stanley and FrontPoint first reached a deal to split in October. The following month, a French doctor was arrested and accused of passing confidential information on to a hedge fund, later identified as FrontPoint. In the wake of the arrest, FrontPoint saw its assets under management plummet from $7 billion to $4.5 billion, although they have rebounded somewhat.

It is unclear what the new terms of the spin-off are. Under the original plan, Morgan Stanley was to retain a sizeable stake in FrontPoint and a share of its profits for up to five years at it sought to recoup the $400 million it paid for the firm five years ago. At the time, Morgan Stanley said the spin-off would cost it $70 million, but last week revealed that it was taking a $126 million charge.

Editor's Note

In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…